TRICO BANCSHARES / [TCBK] Filings

10-Q 1 tcbk-20230930.htm 10-Q tcbk-20230930

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

FORM 10-Q

___________________


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended: September 30, 2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission File Number: 000-10661

___________________

(Exact Name of Registrant as Specified in Its Charter)

___________________


CA						94-2792841
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

63 Constitution Drive

Chico, California 95973

(Address of Principal Executive Offices)(Zip Code)

(530) 898-0300

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock

TCBK

The NASDAQ Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☒

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding for each of the issuer’s classes of common stock, as of the latest practical date:

Common stock, no par value: 33,268,102 shares outstanding as of November 3, 2023.

Table of Contents

TriCo Bancshares

FORM 10-Q

TABLE OF CONTENTS


			Page
PART I – FINANCIAL INFORMATION			3
Item 1 – Financial Statements (Unaudited)			3
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			42
Item 3 – Quantitative and Qualitative Disclosures about Market Risk			66
Item 4 – Controls and Procedures			66
PART II – OTHER INFORMATION			67
Item 1 – Legal Proceedings			67
Item 1A – Risk Factors			67
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			68
Item 5 - Other Information			68
Item 6 – Exhibits			69
Signatures			70

Table of Contents

GLOSSARY OF ACRONYMS AND TERMS

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:


ACL			Allowance for Credit Losses
AFS			Available-for-Sale
AOCI			Accumulated Other Comprehensive Income
ASC			Accounting Standards Codification
CARES			Coronavirus Aid, Relief and Economic Security Act
CDs			Certificates of Deposit
CDI			Core Deposit Intangible
CECL			Current Expected Credit Loss
COVID-19			Coronavirus Disease
CRE			Commercial Real Estate
DFPI			State Department of Financial Protection and Innovation
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
FHLB			Federal Home Loan Bank
FOMC			Federal Open Market Committee
FRB			Federal Reserve Board
FTE			Fully taxable equivalent
GAAP			Generally Accepted Accounting Principles (United States of America)
HELOC			Home equity line of credit
HTM			Held-to-Maturity
I/O			Interest only
NPA			Nonperforming assets
OCI			Other Comprehensive Income
PCD			Purchase Credit Deteriorated
PPP			Paycheck Protection Program
PSU			Performance based restricted stock
ROUA			Right-of-Use Asset
RSU			Restricted Stock Unit
SBA			Small Business Administration
SERP			Supplemental Executive Retirement Plan
SFR			Single Family Residence
SOFR			Secured Overnight Financial Rate
TDR			Troubled Debt Restructuring
VRB			Valley Republic Bancorp
XBRL			eXtensible Business Reporting Language

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

TRICO BANCSHARES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data; unaudited)


	September 30, 2023		December 31, 2022
Assets:
Cash and due from banks	$	75,332	$	96,323
Cash at Federal Reserve and other banks	35,767		10,907
Cash and cash equivalents	111,099		107,230
Investment securities:
Marketable equity securities	2,517		2,598
Available for sale debt securities, at fair value (amortized cost of $2,509,623 and $2,742,987)	2,174,337		2,452,438
Held to maturity debt securities, at amortized cost, net of allowance for credit losses of $0	139,058		160,983
Restricted equity securities	17,250		17,250
Loans held for sale	644		1,846
Loans	6,708,666		6,450,447
Allowance for credit losses	(115,812)		(105,680)
Total loans, net	6,592,854		6,344,767
Premises and equipment, net	71,760		72,327
Cash value of life insurance	136,016		133,742
Accrued interest receivable	34,595		31,856
Goodwill	304,442		304,442
Other intangible assets, net	11,768		16,670
Operating leases, right-of-use	27,363		26,862
Other assets	273,303		257,975
Total assets	$	9,897,006	$	9,930,986
Liabilities and Shareholders’ Equity:
Liabilities:
Deposits:
Noninterest-bearing demand	$	2,857,512	$	3,502,095
Interest-bearing	5,152,131		4,826,918
Total deposits	8,009,643		8,329,013
Accrued interest payable	6,688		1,167
Operating lease liability	29,527		29,004
Other liabilities	141,692		159,741
Other borrowings	537,975		264,605
Junior subordinated debt	101,080		101,040
Total liabilities	8,826,605		8,884,570
Commitments and contingencies (Note 9)
Shareholders’ equity:
Preferred stock, no par value: 1,000,000 shares authorized, zero issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, no par value: 50,000,000 shares authorized; 33,263,324 and 33,331,513 issued and outstanding at September 30, 2023 and December 31, 2022, respectively	696,369		697,448
Retained earnings	599,448		542,873
Accumulated other comprehensive loss, net of tax	(225,416)		(193,905)
Total shareholders’ equity	1,070,401		1,046,416
Total liabilities and shareholders’ equity	$	9,897,006	$	9,930,986

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

TRICO BANCSHARES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data; unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Interest and dividend income:
Loans, including fees	$	91,707	$	75,956	$	260,868	$	203,619
Investments:
Taxable securities	18,657		16,864		55,746		40,862
Tax exempt securities	1,350		1,468		3,920		3,733
Dividends	333		258		935		833
Interest bearing cash at Federal Reserve and other banks	333		1,820		976		3,469
Total interest and dividend income	112,380		96,366		322,445		252,516
Interest expense:
Deposits	17,379		992		33,981		2,519
Other borrowings	5,106		5		13,318		15
Junior subordinated debt	1,772		1,263		5,086		2,906
Total interest expense	24,257		2,260		52,385		5,440
Net interest income	88,123		94,106		270,060		247,076
Provision for credit losses	4,155		3,795		18,000		14,225
Net interest income after credit loss provision	83,968		90,311		252,060		232,851
Non-interest income:
Service charges and fees	13,075		12,682		37,240		37,422
Gain on sale of loans	382		357		883		2,145
Loss on sale of investment securities	—		—		(164)		—
Asset management and commission income	1,141		1,020		3,233		2,946
Increase in cash value of life insurance	684		659		2,274		2,049
Other	702		922		1,894		2,604
Total non-interest income	15,984		15,640		45,360		47,166
Non-interest expense:
Salaries and related benefits	34,463		33,528		101,740		96,495
Other	23,415		20,937		71,175		60,681
Total non-interest expense	57,878		54,465		172,915		157,176
Income before provision for income taxes	42,074		51,486		124,505		122,841
Provision for income taxes	11,484		14,148		33,190		33,765
Net income	$	30,590	$	37,338	$	91,315	$	89,076
Per share data:
Basic earnings per share	$	0.92	$	1.12	$	2.75	$	2.76
Diluted earnings per share	$	0.92	$	1.12	$	2.74	$	2.74
Dividends per share	$	0.30	$	0.30	$	0.90	$	0.80

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands; unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net income	$	30,590	$	37,338	$	91,315	$	89,076
Other comprehensive income loss, net of tax:
Unrealized losses on available for sale securities arising during the period	(44,040)		(76,740)		(31,511)		(223,748)
Change in minimum pension liability	—		—		—		58

Other comprehensive loss	(44,040)		(76,740)		(31,511)		(223,690)
Comprehensive income (loss)	$	(13,450)	$	(39,402)	$	59,804	$	(134,614)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

TRICO BANCSHARES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except share and per share data; unaudited)


	Shares of Common Stock	Common Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at July 1, 2022	33,350,974	$	696,441	$	491,705	$	(145,969)	$	1,042,177
Net income				37,338				37,338
Other comprehensive loss						(76,740)		(76,740)
Stock options exercised	44,000	856						856
RSU vesting		746						746
PSU vesting		223						223
RSUs released	2,752							—
PSUs released	26,338							—

Repurchase of common stock	(91,875)	(1,918)		(2,340)				(4,258)
Dividends paid ($0.30 per share)				(10,004)				(10,004)
Three months ended September 30, 2022	33,332,189	$	696,348	$	516,699	$	(222,709)	$	990,338

Balance at July 1, 2023	33,259,260	$	695,305	$	578,852	$	(181,376)	$	1,092,781
Net income				30,590				30,590
Other comprehensive loss						(44,040)		(44,040)
Stock options exercised								—
RSU vesting		728						728
PSU vesting		355						355
RSUs released	5,061							—
PSUs released	—							—

Repurchase of common stock	(997)	(19)		(15)				(34)
Dividends paid ($0.30 per share)				(9,979)				(9,979)
Three months ended September 30, 2023	33,263,324	$	696,369	$	599,448	$	(225,416)	$	1,070,401

Table of Contents


	Shares of Common Stock	Common Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at January 1, 2022	29,730,424	532,244		466,959		981		1,000,184
Net income				89,076				89,076
Other comprehensive loss						(223,690)		(223,690)
Stock options exercised	59,325	1,112						1,112
RSU vesting		2,025						2,025
PSU vesting		686						686
RSUs released	48,234							—
PSUs released	26,338							—
Issuance of common stock	4,105,518	173,585						173,585
Repurchase of common stock	(637,650)	(13,304)		(13,540)				(26,844)
Dividends paid ($0.80 per share)				(25,796)				(25,796)
Nine months ended September 30, 2022	33,332,189	$	696,348	$	516,699	$	(222,709)	$	990,338

Balance at January 1, 2023	33,331,513	$	697,448	$	542,873	$	(193,905)	$	1,046,416
Net income				91,315				91,315
Other comprehensive loss						(31,511)		(31,511)
Stock options exercised	8,000	156						156
RSU vesting		2,082						2,082
PSU vesting		972						972
RSUs released	72,847							—
PSUs released	55,928							—
Repurchase of common stock	(204,964)	(4,289)		(4,819)				(9,108)
Dividends paid ($0.90 per share)				(29,921)				(29,921)
Nine months ended September 30, 2023	33,263,324	$	696,369	$	599,448	$	(225,416)	$	1,070,401

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

TRICO BANCSHARES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands; unaudited)


	For the nine months ended September 30,
	2023		2022
Operating activities:
Net income	$	91,315	$	89,076
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment, and amortization	4,829		4,489
Amortization of intangible assets	4,902		4,632
Provision for credit losses on loans	16,415		13,645
Amortization of investment securities premium, net	433		6,564
Loss on sale of investment securities	164		—
Originations of loans for resale	(33,389)		(62,192)
Proceeds from sale of loans originated for resale	35,179		66,973
Gain on sale of loans	(883)		(2,145)
Change in market value of mortgage servicing rights	215		(443)
Provision for losses on foreclosed assets	679		113
Gain on transfer of loans to foreclosed assets	(114)		(224)
Gain on sale of foreclosed assets	(38)		(22)
Operating lease expense payments	(4,840)		(4,351)
Loss (gain) on disposal of fixed assets	22		(1,069)
Increase in cash value of life insurance	(2,274)		(2,049)
Gain on life insurance death benefit	—		(309)
Loss on marketable equity securities	81		346
Equity compensation vesting expense	3,054		2,711
Change in:
Interest receivable	(2,739)		(4,384)
Interest payable	5,521		(601)
Amortization of operating lease ROUA	4,861		4,432
Other assets and liabilities, net	(21,016)		(7,201)
Net cash from operating activities	102,377		107,991
Investing activities:
Proceeds from maturities of securities available for sale	243,245		212,501
Proceeds from maturities of securities held to maturity	21,754		31,421
Proceeds from sale of available for sale securities	24,160		—
Purchases of securities available for sale	(34,468)		(699,035)
Loan origination and principal collections, net	(258,183)		(603,581)
Loans purchased	(6,423)		(21,292)
Proceeds from sale of other real estate owned	165		416
Proceeds from sale of premises and equipment	—		6,689
Purchases of premises and equipment	(3,885)		(3,130)
Proceeds from conversion of life insurance	—		641
Cash acquired from VRB, net of cash consideration paid	—		426,883
Net cash used by investing activities	(13,635)		(648,487)
Financing activities:
Net change in deposits	(319,370)		73,131
Net change in other borrowings	273,370		(3,019)
Repurchase

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